Europe's leaders 'confident about economy'

Europe's leaders 'confident about economy'
Prime Minister Lee Hsien Loong with King Felipe VI at the Palacio de La Zarzuela in Madrid, Spain, on 6 February 2015.

SINGAPORE - Prime Minister Lee Hsien Loong sees it as a good sign that European leaders have confidence in the state of their continent's economy.

But he noted yesterday that there also were a number of outstanding concerns remaining.

The European Central Bank (ECB) is going into quantitative easing - buying up trillions of dollars in bonds to push interest rates down and pump liquidity into the system - in the hope of stimulating lending and business activity, he said.

"These are not measures which you do unless you think there is something quite serious," he added.

"But they think it is necessary and I hope it will be helpful."

Speaking to Singapore reporters at the end of a week-long trip to Germany and Spain, Mr Lee said that Spain had come out of a very tough time, and its leaders had done all they could heading into an election this year.

He hoped the election would give Spain a good government that would be able to continue with the necessary measures, and help the country play its role in making the euro zone and the European Union (EU) a success.

This, Mr Lee said, would give Singapore an environment in Europe "where we can cooperate with them and do more together".

On Thursday, the European Commission raised its growth forecast for the EU for this year to 1.7 per cent, up from the 1.5 per cent it predicted last November.

The EU is also projected to grow by 2.1 per cent next year.

Its economics commissioner Pierre Moscovici said the fall in oil prices and the cheaper euro were a "welcome shot in the arm" for the EU economy, and the ECB's measures would create a supportive backdrop for reforms.

"But there is still much hard work ahead to deliver the jobs that remain elusive for millions of Europeans," Mr Moscovici added.

Germany is expected to grow by 1.5 per cent this year, and Spain by 2.3 per cent.

Mr Lee noted that Europe also needed fiscal policy steps, economic restructuring and political arrangements to be consolidated and integrated.

And its major economies had to deal with immediate fires that may crop up like Greece, whose debt crisis threatens the EU and has pitted it against Germany.

Greece featured in Mr Lee's meetings with German leaders this week, and he said the fear they had was not just Greece, but the precedent it set.

And if Greece could get certain terms, other economies in trouble would expect the same, as would their voters, he added.

As for Spain, Mr Lee said that Singapore's relations with the country were comparatively less than with other major European economies.

But business links could be built up.

Singapore companies could work with Spanish ones to do more in Latin America, and Spanish companies are interested in doing more in Singapore and Asia, he noted.

Mr Lee said that Spanish business leaders whom he met had said they were keen to bid for and win Singapore's infrastructure projects, including MRT lines.

"They have bid before; so far they have not won, so I have encouraged them to keep on bidding," he said.

But he said that Spanish banks were already in Singapore, and cited Santander and BBVA, as well as oil group Repsol.

Other Spanish household names include clothing retailer Zara and frozen yogurt chain Llao Llao.

Earlier yesterday, Mr Lee had an audience with King Felipe VI of Spain.

They reaffirmed the good bilateral relations between Singapore and Spain, and discussed ways to deepen bilateral cooperation for mutual benefit, Mr Lee's press secretary Chang Li Lin said.

Such cooperation includes leveraging on each other's strengths as hubs in their respective regions, she added.

Mr Lee also met Spanish Prime Minister Mariano Rajoy, who hosted him to lunch.

Both leaders agreed to work to strengthen the flow of trade and investments between the two countries, and underscored the importance of the EU-Singapore free trade agreement in that regard, Ms Chang said.

The leaders also agreed on the importance of the rule of law in the conduct of international relations.

Mr Lee left for home yesterday.


This article was first published on February 07, 2015.
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